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How is Military Retired Pay Divided in a Divorce?

Feet of Military Couple Considering Divorce

In divorces in which one or both spouses is a military  member, a significant asset often at issue is the pension, also referred to as military retired pay. How is military retired pay divided in a divorce?

Unlike most marital assets and debts governed by state-specific laws, which often vary widely from state to state, division of military retired pay and calculation of its value upon divorce is governed by the Uniformed Services Former Spouses' Protection Act (USFSPA), a federal statute.

What is Different About Dividing Military Retired Pay

In typical divorces, money paid into one spouse's retirement plan by an employer during the marriage is divisible as marital property.  If a couple were married for three years, for example, his or her spouse could be entitled to a portion of a 401K earned during the marriage.

Things are different with a military pension. The so-called "10/10 rule applies." The Defense Finance and Accounting Service (“DFAS”), will not make payments directly to the spouse, despite a state court order directing it to,  unless:

  • The couple was married for 10 years or longer, AND
  • During the marriage, the service member spouse performed at least 10 years of military service creditable toward retirement eligibility.  

In other words, a military spouse is not automatically entitled to direct payment of part of the service member's military retired pay unless the 10/10 threshold is met. If it is met, and the state court has jurisdiction over the service member, military retired pay can be divided as property in the divorce.

A divorce court can also allocate survivor benefits to a former military spouse. The Survivor's Benefit Plan, or SBP, provides monthly payments equal to 55% of the selected retired pay amount to one named survivor, which may be a former spouse. There is a premium for SBP coverage, which may be paid by either the military service member or ex-spouse, or both..

SBP is an important consideration in light of how the military treats survivorship benefits. If the ex-spouse predeceases the service member, the ex-spouse's full share of benefits reverts to the service member. However, if the service member predeceases the ex-spouse, the ex-spouse may receive nothing unless there is an SBP in effect.

Considerations When Dividing a Military Pension

Division of a military pension is a complex matter. It is always best to have a family law attorney who is well-versed on the topic.  An experienced attorney will help you consider factors such as the length of the marriage and years of service, and what fraction to use to fairly calculate each party's share of the pension. Cost of living adjustments (COLA) are also an important consideration. If the ex-spouse takes a fixed-dollar award, he or she will not be eligible for COLA in subsequent years, which could be significant.

Language matters when dividing a military pension. Your attorney should explain, for instance, the difference between "disposable retired pay" and "gross retired pay." If only disposable retired pay is divided, that could mean less money for the ex-spouse of the service member.

If the service member is eligible for disability compensation, that could potentially reduce the amount of the military pension, which would in turn reduce the share available to the ex-spouse. Careful drafting and inclusion of a "reimbursement" clause may avoid this result by ensuring that the service member compensate the ex-spouse for any loss of pension.

Whether you are a service member or a military spouse, if you are contemplating divorce, you need knowledgeable guidance regarding the division of military retired pay. We invite you to contact Lesley Foss for a consultation.

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